Are you sitting back and thinking it could be time to start analysing the Betashares Legg Mason Equity Income Fund (Managed Fund) ETF (ASX: EINC) and iShares S&P Global Consumer Staples ETF (ASX: IXI)? These two ASX ETFs aim to provide conveninent exposure to the Australian shares and International shares sectors, respectively.
Why investors choose the EINC ETF
The BetaShares EINC Fund provides investors with an actively managed portfolio of high-yielding Australian companies. Legg Mason Asset Management is the investment manager for this fund.
As at the end of last month, the EINC ETF had $21.82 million of money invested. Since its funds under management (FUM) or ‘market cap’ figure of less than $100 million, it’s important to consider if this ETF is still too small. At Best ETFs we say an ETF with more than $100 million invested is typically more sustainable than one with less than $100 million (at least). However, there are exceptions to this rule of thumb, especially if the ETF issuer/provider is committed to growing the ETF’s FUM to the point where it becomes profitable.
Fees & costs
The yearly management fee on the EINC ETF is 0.85%. The issuer, Betashares, takes this out automatically.
What this fee means is, if you invested, say, $2,000 in the EINC ETF for a full year you could expect to pay management fees of around $17.00. This fee is different from the fee you pay to your brokerage provider (e.g. CommSec, NabTrade, SelfWealth, etc.) to buy or sell the ETF. Importantly, you should also be mindful of the ‘spread‘ for the ETF.
Is the ETF too expensive?
The easiest way to know if the ETF is too costly is to compare it with other ETFs in the same sector, and against the industry average. The average management fee (MER) across all of the ETFs covered by Best ETFs Australia is 0.54%, which is around $10.80 per $2,000 invested. Small changes in fees can make a big difference after 10 or 20 years. To understand all of the fees, you should read the EINC Product Disclosure Statement (PDS), available on the ETF issuer’s website, because it has the complete and up-to-date information.
Make sure you check out our EINC ETF report, available free when you clock here: access the free investment report.
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A look at the IXI ETF
The iShares IXI ETF provides investors with targeted exposure to global consumer staple companies. Think along the lines of milk, chocolate, soft drink, makeup, clothes and wine.
At the end of April 2020, IXI’s FUM stood at $175.23 million. With IXI’s FUM over $100 million, we say the ETF has met our minimum criteria for the total amount invested. However, in reality, a very sustainable ETF in the Index sector should be able to scale well beyond that amount.
Are IXI’s fees too high?
iShares charge a yearly management fee of 0.47% for the IXI ETF. Meaning, with $2,000 invested for 12 months you can expect to pay a base management fee of around $9.40.
The management fee is above the average for all ETFs on our radar, but keep in mind the ETF may be able to justify it.
If you like what you’re reading, access our full review of the IXI ETF by clicking here
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